InSight Nixes Stock Sale Amid Executive Shakeup
By VITA REED
InSight Health Services Holdings Corp. has called off plans for a quirky type of initial public offering amid a management shakeup.
The Lake Forest medical diagnostic facility operator “elected to withdraw its registration statement due to current market conditions for public offerings,” said Michael Cannizzaro, the company’s newly appointed chief executive, in a statement.
InSight’s former chief executive, Steven Plochocki, and Michael Madler, a former executive vice president, left before the company said it was nixing the offering.
Cannizzaro, InSight’s chairman and an operating partner of Boston-based J.W. Childs Associates LP, one of InSight’s owners, was named chief executive and president. Cannizzaro wasn’t available for comment last week.
In June, InSight filed plans with the Securities and Exchange Commission to offer a combination of debt and stock worth up to $675 million for its InSight Health Services Corp. unit.
InSight planned to go public through income deposit securities. Those are shares representing a combination of common stock and junk-rated bonds. CIBC World Markets and Banc of America Securities were set to underwrite the offering.
Income deposit securities are valued on the consistency of a company’s cash flow, rather than trading on a company’s growth prospects.
Income deposit securities have their critics. A Wall Street Journal article recently referred to them as “essentially a way to put riskier junk bonds into small investors’ hands.”
InSight planned to use proceeds from the offering to pay off debt due in 2011 and for some of its diagnostic centers.
Attempts to reach Plochocki weren’t successful. InSight’s statement about his departure said he was “planning to pursue other interests and opportunities.”
J.W. Childs and the Halifax Group LLC, a Washington, D.C.-based firm, took InSight private in 2001.
One industry source said executive departures could be related to troubles integrating recent acquisitions, rather than the income deposit security offering.
InSight operates some 230 diagnostic medical imaging centers and trucks that come to hospitals and doctors’ offices. Services include X-rays, computed tomography scans and magnetic resonance imaging. The company counts yearly sales of $260 million.
InSight was public before and came about through the 1996 combination of American Health Services Corp. of Newport Beach and Texas-based Maxum Health Corp. Both companies were publicly traded.
